Good afternoon everyone, and welcome to Kongsberg's Capital Markets Day 2022. Both to all of you, those of you that are present here in Oslo, as well as those of you following the webcast online. Today you will receive presentations from broad group of Kongsberg executives diving into our targets, initiatives and efforts to supply our markets with reliable, efficient and sustainable solutions. The agenda is on the screen behind me, and we will accept questions after each of the sessions. We will also accept questions entered into the webcast. Those will be asked by me during the Q&A session. With that, it's showtime and after a short introduction video, President and Chief Executive Officer Geir Håøy will take the floor.
Yes. Good afternoon, everyone. Really good to see you all.
Also those of you following us on the webcast, good afternoon to you as well. On behalf of the executive team in Kongsberg presented today, welcome to the Capital Market Day of 2022. It's a pleasure to see you all, at least those of you here, finally meet in person again. It's been a while. Is something missing here? Yeah, probably come back. There. Very good. Sustainable value creation, which is written on the top of my presentation, today. These are three words that basically cover the essence that we gonna present to you here today. Let me start with the beginning. These snaps, not this one. Everybody have read the disclaimer.
Let me start off today with the slide which provide a snapshot of Kongsberg. As most of you know, Kongsberg, we have a long and proud history from a starting point back in 1814 to the international and diversified company technology corporation as you know today. Kongsberg has always had an innovative technology environment. Our first international breakthrough came already back in 1888. I don't think anybody remembered that. But that was when the Krag–Jørgensen was selected as the standard rifle at the US. Army. Since then list of innovative breakthrough have grown large ranging from the revolutionary dynamic positioning. We have the autonomous vehicles both on surface as well as under the sea floor.
Digital twins, we have the fifth generation, missile systems, remote weapon systems and surveillance systems, for surveillance system from space, and so on. Today, we are truly a global. We have truly a global presence. We are in more than 40 countries, and we have also the satellite ground stations in both the poles. We are more than 11,000 employees in Kongsberg today, and I think they have really proven their value, and dedication over the last two years, when we had these difficulties caused by the COVID, the pandemic. Last year, our revenue was ending at NOK 27.5 billion, and that was despite the challenging conditions that I just mentioned. This is up more than 7%, year-on-year. For me, Kongsberg represent the future.
We have a world-leading domain knowledge. We have number one products in a growing industries. Our history proves that we are determined to continue to grow, deliver and develop state-of-the-art technology. As the president and CEO of Kongsberg, I'm very pleased to say that we are delivering on our key strategic priorities, as you can see here. We have still a very strong balance sheet and have grown our top line and also our earnings despite the challenging conditions. Kongsberg Maritime has expanded their scope and continue to attract orders for vessels both in the new building market, but also in the aftermarket. Kongsberg Defence & Aerospace has capitalized on its strong position in defense and have secured also several contracts, giving us a very solid backlog.
Kongsberg Digital has scaled up their software as a service business. We'll continue to roll out the Digital Twin systems and also Vessel Insight. We also at the same time have achieved a top rating in leading ESG benchmark like such as the Sustainalytics and also MSCI. We continue to innovate and empower our customer to better manage their security and sustainability challenges with our technology. All in all, I'm very pleased to deliver as we promised. I can assure you that we are determined to do so also going forward. Kongsberg is performing strong. However, at the same time, we operate in a global market where the environment is categorized with more uncertainties than we have seen for quite some time.
The Russian invasion of Ukraine is just tragic and must be condemned and sanctioned. The war is increasingly affecting the global security economy and many other areas. Unfortunately, the impact is likely to grow. Energy prices was already increasing before the invasion of Ukraine and have become even more challenging with the sanctions on the Russian oil and gas, which we believe of course is necessary, despite the impact it will have on us and also our customer. There is also a global shortage of certain components caused by the production losses due to the COVID pandemic. While it actually appears that this gradually return towards increasing production capacity in some areas, COVID has not gone away and is still impacting some countries like we see in China right now.
There is some dark clouds gathering that we will surely test our ability to meet and adapt to the rapid changing conditions. When that is said, coping with the situation is top of my agenda, and I know also my management team. We are taking proactive measures in close collaboration with our suppliers, partners and also customer. I just want to reassure you about this. Whatever the global landscape may look like in the future, Kongsberg, we are prepared and determined to deliver and maneuver in a changing world in order to protect Kongsberg and our stakeholders' interest. I firmly believe that Kongsberg is well-positioned for further growth and value creation.
This is built on our status of being recognized as a trusted global technology powerhouse with deep domain knowledge in our industries. The rapidly changing business environment of the last two years has shown that we can navigate and prosper in shifting external landscape. We have dedicated employees at all levels, and we have a very strong culture of collaboration, determination, innovation and also the adaptability. We continue to utilize our world-class product and service portfolio and also our crossover technologies. This is to secure and also grow our position. I'll just mention one example, the last year. We have now been awarded offshore wind contracts for approximately NOK 2 billion, which I think demonstrates how we are able to utilize our technology in new and growing segments.
Further, we have high focus on building strong and trusted global partnership in all business areas. These partnerships gives us access to new capabilities, new markets, and extended opportunity pipeline. Over more than 50 years of partnership with Raytheon, I think really demonstrate the value of strong partnership. The development and success of NSM and NASAMS would not have been possible without this partnership. There is one goal that we never lose sight of, and that is to create sustainable long-term value. To us, delivering on our financial targets and on the sustainability agenda goes actually hand in hand. We aim to be the best in class when it comes to environmental, social and governance matters.
Going forward, we believe our growth will and value creation will be driven by three key trends and drivers. The decarbonization and the increasing importance of business and global collaboration in achieving sustainable development goals, an increasing demand for digitalization in all areas and industries, and increasing need for security and defense systems in a changing geographical environment. With our business model, deep domain knowledge and technology platform, Kongsberg is well-equipped to handle and also to take advantage of these trends. Our technology can solve the key climate and environmental issues in the ocean space domain. Our digital solutions empower customer to optimize their vessels and other assets. Our modern defense portfolio is perfect fit to many nations' security and also capacity needs.
Looking at these trends, Kongsberg will definitely make a difference and also be a key part of the solution going forward. We are investing a lot of resources to further position Kongsberg as a key part of the solution to the global security challenge. As you well know, Kongsberg has secured a number of recent important contracts, underlining our leading position within the F-35 program, the missile systems, air defense, remote weapon stations, and control and command systems for submarines, and also the satellite surveillance. We have today a highly modern defense portfolio consisting of world number one product and systems with a proven track record. Many nations and customers therefore look to Kongsberg for future defense investment. We experienced increased demand from many existing customers.
I think security is high on the agenda for almost every nation these days. The tragic war in Ukraine was a turning point and an eye-opening for many nations. A nation's security and sovereignty cannot be taken for granted. In general, I believe the new geopolitical situation in combination with a stronger and more unified NATO will drive more interest and willingness to invest going forward. We are also very much part of the solution to the global climate and environmental challenges. Kongsberg's products and services aimed at solving the climate challenges can be found in space, under the sea and on ships. We work with many customers and partners to deliver zero and low emission ships, and to develop offshore wind, and reduce the environmental impact of supply chain logistics.
Kongsberg Maritime, with its expanded scope after acquisition of commercial marine, is the world leader in marine technology with an installed base of impressive 30,000 vessels. They serve the entire ocean space domain and provide all technology, equipment, service required to operate at sea in a secure and sustainable way. That's ranging from offshore research merchant fishing to subsea and advanced offshore operation linked to agriculture, oil and gas and offshore wind power. The International Maritime Organization is challenging all shipping companies and also ship owners to find and develop and integrate new, more energy efficient solutions to meet the strict emission reduction targets set for 2030 and 2050.
The target is to reduce the carbon emission by 40%, by 2030, and that is compared to the 2008 level, and also to cut at least 50% of the shipping industry total greenhouse gas emission by 2050. I think technology, actually, I'm sure technology is the key enabler for meeting these goals, creating a more sustainable and also a healthier ocean. We are at the technology forefront globally in this industry, and we expect to increase demand for environmentally friendly solutions on the roads towards 2030 and 2050. Technology as a key enabler to meeting these goals. I believe also digitalization will also be a key part in the green transition.
I will come back to that a little bit later, when I go into the Kongsberg Digital presentation today. In addition to deliver on the financials and growth, I have an overall mandate to create a more sustainable world. We aim to be a trusted partner for customer industries and society in this transformation. We are addressing sustainability across several perspectives. We analyze, we minimize and manage our ESG-related risk. We look for opportunities to create value and competitive advantage by integrate sustainability into our strategy, and also into our business model. We trust and we promote climate science and strongly support the ambition of the Paris Agreement. Therefore, we have also committed to the Science Based Targets initiative, and we are now in the process of validating the preliminary target in that sense.
We are also aiming to reduce our emission from our own scope one and two. That is the target that we're gonna reduce that by nearly 100% within 2030. Kongsberg has today a very low carbon footprint. I think where we can really make an impact is through our business model, suppliers and also our customer. Therefore, we also aim for that two-thirds of our suppliers should set their own science-based target within 2027, which is in line with the Paris Agreement. Not to forget, we enable our customer to reduce their emission and increase their positive impact on the environment with our technology.
I would also like to mention that we work systematically to incorporate circular principles into our business model, with particular emphasis on product design, raw material and material technology, waste management, and also end use of our products. This is also a new business opportunity. At the same time, it strengthen our capability to adapt across the Maritime, defense and digital activities. We are always looking at new opportunities for sustainable growth, and I just would like to share some core elements in our M&A thinking. We aim to strengthen our core business by further utilizing our world leading position and unique product portfolio. We are looking to improve our geographical foothold for defense business. Eirik and Pam will come back to that a little bit later.
We're seeking to add complementary products and technology, in order to expand scope in growing industries. We want to continue to scale up our digital offerings with more applications, and utilizing our software as a service business model. Offshore wind represent a huge potential, and we want also to further explore that opportunity, in a wider context than we do today. Space is getting even more increasingly more important for us and we are exploring today how to strengthen our space business, both in the commercial side but also on the defense side. We are also searching for selective, adjacent, and interesting opportunities.
Yesterday, I visited Bodø for the opening of the remote tower center there, and that is that kind of opportunities. We are continuously looking for new opportunities, and I believe that with this broad M&A approach, we could lead to many opportunities and paths to grow our business in the coming years. Why should you invest in Kongsberg? Try to put it simply. I firmly believe that we have a diverse, robust, and resilient business which is really unique. We are highly focused on building a strong performance culture with clear focus on the value creation. I think also that our expertise and know-how in our markets is world leading and also quite unique. We have the technology our customers need to meet their security and sustainability demands.
Not least, we also have a very robust order backlog and, which we're gonna hear more about today, a growing pipeline, which gives us quite a good visibility going forward. In combination with our, strong focus on people, technology and dedication, I think Kongsberg is a good place to deliver a further growth. With that, thank you for the attention so far today. I will be back. It's a pleasure to introduce our always forward-looking and hardworking CFO, Gyrid Skalleberg Ingerø. Gyrid, the floor is yours.
Thank you, Geir. Thank you for coming today, and thank you all for listening in. It's good to see so many back to listen to this fantastic company that we always love to talk about. After the facts and figures, you will also be able to have a deep insight in some of our business areas. I look also forward to that. By that, our capital markets day is both to look forward, but it's also to have some reflections. Over the last four years, Kongsberg has become a successful growth story, and growth will continue. Looking at this development, Kongsberg has delivered a growth of more than NOK 14 billion, out of which 50% was acquired growth, and 50% is organic growth, representing a CAGR of 18% over the last four years and the first quarter.
If you take out the acquired growth, we have a CAGR of 10% so far. Just want to share some thoughts on the different business areas, starting with Maritime on the top here. This slide shows quarterly revenue development per quarter at the last five years, with value reflected at the left axis, as well as rolling twelve months annual revenue, with value reflected on the right axis. You can see the uplift from NOK 2.1 billion- NOK 4.2 billion after the acquisition of Rolls-Royce Commercial Marine in the second quarter 2019. With acquisition, we expanded our delivery scope and established two new business divisions. With propulsion and engine and deck and machinery in-house, Maritime had, since 2019, consist of five divisions.
I would first like to bring your attention to the global customer support, which now have 12 months rolling revenue of NOK 8.3 billion and are now 15% larger compared to the whole Kongsberg Maritime before the acquisition. It's the blue, at the end here on the bottom of the graph. This has been, and still are, a solid and growing business for us. Kongsberg Maritime had, before the acquisition, 30%-40% of its revenue from the aftermarket before the Commercial Marine acquisition. Now more than 50% of the total revenue is generated from the aftermarket. Together with the cost efficiency program, this has been a key driver for the profitable growth that we have seen in Kongsberg Maritime.
Looking at the positive market development at the end of 2019, as you can see here from the second quarter and up to the end of 2019, we were, like others, hit by COVID in the second quarter of 2020, and investments were put on hold for a lot of shipowners. From the fall of 2020, global customer support has increased their revenue by more than 50% on the top line. In Defense, air defense system has been the main driver the last two years, together with other aerostructures, where we produce parts for F-35 and also land systems where we produce weapon stations. Looking at Q1 this year, you can see the delay from remote weapon stations due to components shortage reflected in the land system revenue.
That said, the overall growth in Defense has been amazing over the last four years, from NOK 6.3 billion to NOK 10.1 billion now. From second quarter 2019, Defense has delivered on growth with an amazing book-to-bill, adding up to now NOK 35 billion in the order backlog. Both Maritime and Defense have seasonality. We do not very often talk about that, but you can see it quite clear here when you see the quarters on top of each other. That's typically due to milestone deliveries towards the end of the year. Kongsberg Digital. Kongsberg Digital has had some of flattish revenue over the last three to four years if you look at the total revenue for Kongsberg Digital. But if you look at the development for the growth areas, KDI has had a good improvement.
The most important financial KPIs that we follow on Digital is the development in the recurring revenue. As you can see from the graph on the left-hand side, Digital has managed to increase its rolling 12-month recurring revenue with more than 50% since Q4 2019. Going forward, we expect the recurring revenue to continue to grow and at an even faster pace. This growth will be driven mainly by the two growth areas that we have, Vessel Insight and Digital Twin. As you can see on the graph on the right-hand side, we see a solid development in the main KPIs, both with regards to number of vessels in Vessel Insight and number of Digital Twins in operation. Later today, we will present some more details into the prospects growth for these two areas going forward.
When that's said, we also expect a healthy contribution from our established business, in particular from SiteCom, that now is in a transition to be delivered as a SaaS business model. We have already transferred some customers over to the SaaS business model and are in process to transfer several others in that area. Associated companies. In addition to our revenue and EBITDA, we also have several associated companies with Kongsberg Satellite Services and Patria being the main contributors. Despite this, they are not included in our long-term revenue and EBITDA targets. These companies are important contributors to our earnings per share. Both companies are well-positioned in their core markets for further growth. The cash from dividends will of course be received the fiscal year after in terms of the graph that you see here. Both companies have shown solid development lately.
If you look at KSAT from 2016 up to today, they have doubled their revenue from NOK 600 million- NOK 1.2 billion. That figure you will not see on the slide. Patria has, over the last two years, managed to lift their profitability dramatically, and the outlook for both companies is strong. Patria has also launched a 6x6 vehicle where they have won contracts both in Finland and internationally. Very good outlook for both of those associated companies. What about this year? On our Capital Markets Day in 2019, we presented our targets for the coming three-year period. As you can see, we are trending towards our targets. We did not state a specific target for return on capital employed. We promised that if we delivered on the other targets, this would improve considerably.
The result as of Q1 2022, you can see here implying a tripling of return on capital employed over the past three years. This is mainly driven by an improvement in our operating result, the EBITDA. When presenting these targets 2.5 years ago, we had started the integration of Commercial Marine and had already introduced a cost efficiency program. We also saw tendencies improving Maritime markets, and the future was quite bright at that time. In the beginning of 2020, COVID came and suddenly, as an international company, everything was turned upside down. Maritime contracting stopped. We were uncertain about the effect on defense, and we had to adapt the organization to something that was hard to foresee the outcome of. Despite this, we kept, we stick to our main strategy.
We pushed the integration of Commercial Marine and continued to hunt for new opportunities. We had one message to the organization every day, every week: protect the cash. On the next slide, I will give you some details on the revenue and on the EBITDA development to give you some more insight in what we think about 2022. Our target for this year is to deliver more than NOK 30 billion in revenue in 2022. Last quarter, we reported rolling 12 months revenue of NOK 28.1 billion. Since 2019, there has been three major effects on the revenue. First being organic growth, mainly from defense. Secondly, we have full year effect of both the Rolls-Royce Commercial Marine, as well as Kongsberg Aviation Maintenance Services that we acquire both of them in 2019.
In addition, in 2020, we divested our previous US subsidiary, Hydroid, which contributed with approximately NOK 800 million in revenue. Despite this divestment, we stick to our long-term total target of NOK 30 million for 2022. For the remaining of 2022, we are pretty confident that we will reach our NOK 30 billion target by the end of the year. This is despite a few things that I would like to mention. In April this year, we exited from the sales and service agreement that we have with the Bergen Engines. In addition, keep in mind that our historical figures also includes revenues from customers that will no longer deliver due to sanctions against Russia. These two issues together had sales for some NOK 1 billion in Kongsberg Maritime last year. What about the EBITDA?
We have had a solid development in EBITDA, and since 2019, we've grown both nominal EBITDA and also the margins. Here you can see the drivers from the EBITDA, and you will not be able to calculate that when you see in the quarterly report because here we are dived into the gross margin. Growth has been a main driver for the uplift on profit with some 60% from defense and 40% from Maritime. Normally, we have 60% of the revenue from Maritime. When it comes to profit, it's the opposite way, 60% from the defense in this period. In addition, we have had a high share of international sales in defense and an increasing share of aftermarket in Maritime that have made a positive impact on the margin for both those areas.
The integration of Commercial Marine and the value capture program related to this has been very successful, and we have managed to capture annual savings of NOK 640 million, out of which NOK 260 million already was in the 2019 figures. The positive effects are slightly offset by some increase in SG&A, as well as investment in product and development to secure further growth. On our Q1 presentation, we reported a rolling twelve months EBITDA of NOK 4 billion with a margin of 14.3% above the year target for this year. We still believe that we will be able to deliver on this year's target with 13% in Maritime, obviously more challenging than 16% in Defense.
Both the revenue and the EBITDA can have some delays between the quarters due to challenges around logistics and components. We still believe that a margin of 14% for this year are achievable for the Kongsberg Gruppen as a whole. This is probably the most interesting slide today. What will we now aim for in 2025? In our new target for 2025, we will again hunt for growth. We will add on NOK 10 billion more in organic growth in addition to our NOK 2.8 billion revenue targets for Kongsberg Digital. Our current order backlog gives comfort for further growth, and we believe that the main drivers for this growth will consist of contribution from the aftermarket, the offshore wind deliveries, and the Maritime robotics in Maritime, missile deliveries, air defense, and remote weapon stations.
The revenue growth will come in a split, as you can see on the chart here, with NOK 33 billion as a target for Maritime and NOK 17 billion as a target for Defence, implying a CAGR of close to 9% in Maritime and 14% in Kongsberg Defence compared to the 2021 figures. In terms of the margins, we aim for a uplift again from 14%- 15% for the group, with respectively 17% for Defence and 14% for Maritime. Then someone might ask, looking at Defence target of 17% is down from today's trending margins. The mix in projects with about 90% international sales with favorable margin mix will change. That said, in nominal value, the uplift in profit will be close to NOK 1 billion only for Defence alone.
For Maritime, the ability to take out scale and streamline the international operations combined with a positive view on the new build market and upcoming services toward the green shift will contribute to a higher margin going forward also for Maritime. Two years ago, we introduced the capital allocation principles or priorities. They will stay unchanged, so I will comment on all of them one by one. Starting with our first priority, to have a solid balance sheet and always have access to funding. This is important for our customers who need security for us being there to support them, not only when delivering our system, but as long as the delivered system will be in operation. A solid balance sheet also puts us in a position to turn around quickly and capture opportunities.
Remember that with 81% of our 2021 revenue coming from customers outside Norway, we do need a strong balance sheet to carry temporary impacts on liquidity because of our foreign exchange hedging policy. Our net debt to EBIT target remains. However, we are making a technical adjustment to include the impact of IFRS 16. That was not included the last time as IFRS 16 was not yet implemented then. As you can see, we admit that we still are outside the range. However, as stated when we introduced it's a long-term target. As you can see, we are trending towards it and adjusting the Q1 number with NOK 2.7 billion in dividend that we paid out last week, we are getting closer.
As you can see, our capacity is still solid and currently indicates some NOK 10 billion headroom in additional debt capacity based on our financial policy objectives today. A healthy net working capital is also important for our balance sheet. Here, there is a significant difference between Kongsberg Maritime and Kongsberg Defence. For the Maritime business, the working capital will always be positive and to a large extent driven by project mix and volumes. However, it's previously and will continue to fluctuate going forward. Last Capital Markets Day, we stated a normal working capital towards 15%, and we said that we will aim to go down to 10% for Maritime and keep it around 10%. But as you can see here, during the period, we have been below 10%, and we are currently trending at 9%.
With continued strong discipline around capital, we are targeting today's level also going forward, but remember that fluctuations between quarters will occur. In short term, one exception could be if we are able to collect safety stock on specific components, we are willing to increase the working capital temporarily to secure deliveries. For the defense business, it's quite different. Our significant negative working capital is driven by the payment structure negotiated in our sales contract. However, this also depends on the product mix, since some areas have more preferable payment terms than others. It's completely impossible to predict the working capital in Eirik's area. Priority number two in terms of capital allocation is investment for organic growth. To compete on the international arena, we need to keep our positions as front runners.
To live up to the technology powerhouse that Geir has touched upon that we are today, investment in R&D is of high importance. On the defense side, the majority of the R&D is funded fully or partly by our customers. While we on the civilian side carry a lot of those investments ourselves. Typically, the latest years have been the Digital Twin, the Kognitwin platform, and several initiatives to improve the innovative solutions in Kongsberg Maritime. At the moment, we invest close to 5% of our yearly revenue in R&D, where we on average have capitalized approximately 20% of that amount. On top of the customer-funded R&D, we also benefit from varying civilian support streams. For example, now there has been a lot into sustainability from EU.
With regards to R&D, we aim to develop world-class products and solutions, fulfilling our customers' demand, as you see on the circle here, how we are working with that, both when it comes to efficiency, safety, and sustainability. It's important that the development is in such a way that the products and solutions are fit for scaling and efficient deployment. This has generated great success for us, also in competition with major international players and will continue to be the basis of thinking. We need to be able to scale and then deploy internationally. On top of the R&D, we also invest in lifecycle management. Including lifecycle management, we invest approximately 10% of the group revenue each year. Something happened last year. If you look at the graph down here, you can see the order backlog for missiles.
Entering into this year, it was approximately NOK 3 billion. Entering out of last year, it was NOK 12 billion. We got a lot of large orders, not a lot of, but at least two large orders, both for Germany and Norway, on missiles, and we expect that this will continue. In terms of that, we have already started and planned out to build a new missile facility in Kongsberg. In addition, we are just finishing a facility for space. It will be finished this July. Two years ago, we were finished with the new facility for air defense system. To be able to deliver on the backlog and also be able to ramp up new opportunities, we are now investing approximately NOK 1.5 billion over the next two years to be able to do that.
Those facilities, especially for the missile division that has been a bit around in the park at Kongsberg, will provide cost synergies and reduce unit costs due to streamlining and increased efficiency. This is something we really look forward to. The third capital allocation priority, that's for the year, goes with providing a solid remuneration to our shareholders. If we do not have relevant investment cases for further growth, we should not accumulate cash. As you have experienced, NOK 2.7 billion was paid out last week. Since 2019, we have returned NOK 7.5 billion to our shareholders, a combination between dividend and buybacks.
During the same period, we had a strong performance, with a total shareholder return of 226%, compared to Oslo Stock Exchange that have a shareholder return of 61%, so almost 4x , so that much. Just to remind you again about our dividend policy is to have a flat or increasing nominal dividend with special dividend and buybacks as a potential supplement. That's something our board consider every December and take the decision in February, each year. Lots of discussions on that. Then in a world with inflation, how does that affect on Kongsberg? We felt that we need to address that a bit. 75% of the total cost in Kongsberg is cost of goods sold today.
To keep an eye on the contracts and the sourcing is of high importance to keep control of the cost development in the group. Again, out of this, about 50% of the revenue or the cost in Kongsberg, or the revenue in Kongsberg and also cost, are short-term after market sales. Price changes compensate for the inflation. Further, between 40% and 50% of the order backlog in Kongsberg Defence & Aerospace has escalation clauses to compensate for inflation, meaning that high percentage of the running costs have already mechanisms for unexpected cost increase today. Then taxonomy, which everybody try to learn something about, but it's hard to find revenue that actually qualifies for that.
Sustainability is high on the agenda, and we are committed to meet the reporting requirements, once it comes in force after the regulation has been incorporated into the ERE agreement. Most of our time we have spent on, like other companies, to identify the different activities. The taxonomy has been established on a methodology to incentivize public companies to make a positive contribution to reach the Paris Agreement goal. Activities described and prioritized by the taxonomy aim to make a step change on a sustainable direction where significant improvements are possible. As such, non-eligible activities are not synonymous with sustainable activities. Our work shows that current framework of the EU taxonomy prioritizes other activities than Kongsberg business areas today.
Based on the current adaptive scope of the taxonomy, no activities have been found relevant for the defense at the moment, and the impact of the EU prioritizations toward economic activities outside Kongsberg leads to a very modest eligibility in our reporting. As you can see here, we have NOK 28 billion in revenue. Out of those, less than NOK 1.5 billion is eligible, and none of those are aligned today, in today's definition. We're still hunting for those. Having that said, there are very much that we do in terms of that. You see the two cases here. For instance, project for Golden Energy Offshore saved an estimated 1,000 tons of CO2 yearly and represent 20% reduction in fuel consumption. We also saved 7,300 tons of CO2 emission annually in a project for COSL Drilling Europe.
However, as these projects fell outside the scope of activities described in the taxonomy, they should not be considered eligible. This calls for alternative reporting formats, such as the science-based targets, which we have committed to. That in order to the broader scope of our sustainable activities and how we can contribute to develop the industry towards a more sustainable future. Geir has already touched upon that. Last but not least, our fourth priority, the active management portfolio. The active portfolio management includes both acquisitions, divestments, investments, and joint venture. Over the last 10 years, we spent more than NOK 8 billion to more than 20 large and small acquisitions or investments in associates. Geir has already told you what we are looking for. With that, what do we want to do now?
We want to secure growth, hunt for more growth, deliver on our backlog, and search for new growth opportunities, secure competitiveness by being efficient and take out costs. Last but not least, shareholder value through capital prioritizations. Thank you, all.
Okay. I would like Geir and Gyrid to stay on stage, and we open up for questions. First, if you ask your question, please also present yourself with name. Any questions from the audience? We can start. It's one question, maybe a warm-up question from the webcast, goes to the CFO. Are there any plans in Kongsberg to invest in cryptocurrency projects?
No. No, no. That was easy.
Told you it was a warm-up. I have one question from the audience here.
Thank you. Lukas Daul from Arctic Securities. Just regarding your comment on the cost inflation clauses. You said that 40%-50% of the defense contracts have those clauses?
Yep.
The rest is sort of without these or are you sort of fully exposed to inflation on the remaining 50%-60%?
No, you have. That was out of the order backlog, so that will be delivered upfront. You have all the services contract, you have all the bread and butter that you are delivering now, that you also have the same possibility as you have in the Maritime to escalate it with price changes. We can comment on this a bit. Yeah. You have also with the suppliers.
Just to keep it simple, of your backlog that you have in defense right now, how much of that backlog is fully insured, if you wanna use that word, against cost inflation and how much is open?
Between 40-50, and then you have to negotiate for the rest if you see that you have a lot of inflation.
Okay. What is your experience, based on history, regarding negotiating these terms?
It has-
following, let's say, a cost increase?
We take any experience directly here.
Okay. Can you hear me? Welcome to everyone.
Yeah, first of all, I think it's correct what Gyrid stated that it's 40%-50% that is protected. Then we have also signed up quite a huge supplier base that is tied into what we are doing. In addition, I would say history shows that we are able to also renegotiate where we have different uncertainties. It's difficult to give a precise answer, but I feel quite comfortable in how we have handled this.
Maybe also add, I think that there is a built-in inflation because these programs are going over several years. There is a natural escalation there, also, of course. But if it's a normal inflation, we need to renew, renegotiate. That we do.
Instead of renegotiating 100%, you at least have to renegotiate only half of it if it just runs away. Sindre Sørbye, I think from there.
Yes. Hi, it's Sindre Sørbye from Arctic Asset Management. I guess it goes mostly to Gyrid Skalleberg Ingerø and maybe the gentleman in front of me here. On KM, I mean, you said you were quite confident on the 13% target for this year, and even though there are logistical issues, I guess that should not be a problem for 2025. In my opinion, the 40% target is maybe a little modest in light of the strong development we have seen over the last year. Are there any mixed assumptions, or if you can elaborate on the way to this 14% target?
I think we can always wish for more. As you can see, as I also said that, in terms of the 14% target, it's harder to get 13% in Maritime than it is to get 16% in the defense area. Of course, what you can see is that to lift it up to 14% could be quite challenging, we think. Otherwise, I'm always happy to have more margins, as you know. And Geir can also comment on that.
It's to find this balance, to be investing in future technology and products and to deliver from quarter- to- quarter. We feel that that might be a right balance as we see great opportunities also on long-term investments.
Okay. We have one final question from the webcast before we move further into program from Haakon Amundsen, ABG. You seem to emphasize M&A more than recently. You're also indicating investments in facilities. Should we expect significant increase in investments in the coming three-year period?
No. Out of what we know is the NOK 1.5 billion that we just disclosed now. Otherwise, we don't have any concrete plans. We're always searching for new opportunities, as Geir said, in M&A. In terms of facilities, we already have close to 1 and are starting on the third one now.
Thank you. It will be possible to ask questions later also during the program. We would like to continue. After this short movie, you will get an introduction or a presentation of Kongsberg Digital.
Smarter, safer, and greener. These are not just buzzwords. The demand for more efficient and sustainable operations are bigger than ever. When the world demands change, we are up for the challenge. Our powerful blend of data science, technology development, and domain expertise put us in a unique position as the preferred partner for heavy asset industries. Businesses look to us when they need to solve complex challenges, and every day, our products create impact by transforming data into reliable insights and instant actions, making the oil sector more energy efficient, making ships less polluting, and making green energy future-proof. Not only are we preparing our customers for a greener future, but we're also helping them accelerate digitalization and generate value at scale.
Together, we will advance carbon capture and storage, new energy ventures towards net zero, voyage optimization and emissions reduction, balancing grids and complex power systems, simulating high-risk environments. This is just the beginning. A new McKinsey report states that 90% of all industrial data are yet to be utilized. We can't wait to bring that number down. As part of our DNA, we are committed to continuously innovate and turn great ideas into sustainable solutions for people, businesses, and societies. Whatever new opportunities the future brings, we are ready for it. Kongsberg Digital, digitalizing the world's industries for a better tomorrow.
Yes, I told you I will be back. As you know, since Hege Skryseth has resigned, and she decided to join Equinor, she will not be presenting KDI today. I have good assistance anyway. I will just give you a short introduction to KDI, and then you will have more insight into two main growth areas in KDI, which is the digital energy and also the digital ocean. I would also like to just use the opportunity to say thank you to Hege for her contribution and great work she has done for Kongsberg Digital the last five years. We're gonna miss Hege, but we expect that we got a lot of orders from Equinor going forward.
As you saw in the movie, KDI vision is to enable the green shift by digitalizing the industry. What KDI is doing is enabling smarter, safer, and greener operations by transforming data into insights and also into actions and automation. As such, we support our customer as a digital partner to solve the increasing challenge and requirement when it comes to transparency, safety, and efficient operation. With the best-in-class technology and game changer mindset, KDI aim to fundamentally change how their customer work, and also then secure a better tomorrow for people, business and societies. Today, KDI focus is on heavy asset industries, where the complexity is high, and their impact and value are incremental.
Increasing requirements for transparency, safety, not least emissions, is driving the demand for KDI's product across these industries. KDI delivers IoT and digital twin solutions to customers in heavy asset industries, and are today organized in three business areas, representing different customers segments. KDI then focus on developing standard and highly scalable software, which is agnostic across different industries, different assets and again, different customers. Across all the divisions, KDI delivers value from aggregating and contextualizing data to create value adding applications layer on the top. This will be both, this application will be both in-house in KDI, and also third party applications. What KDI is trying to do is to bring down the silos and secure a more efficient work day.
Securing and making all data and use cases available to users through an industrial work surface. Then KDI are built on decades of Kongsberg's history, and one of the key competitive advantage is the strong domain knowledge in the industry KDI work with. Thus also the problems that the industries need to be solved. KDI are now more than 800 employees globally, and can show a strong and growing customer base across all the three divisions. Which indicates that KDI is in a pole position to be a front runner in the digitalization of the world industries. I think Gyrid covered most of the figures for KDI, but we have also previously stated that we have high growth ambition for KDI.
I'm also happy to see that there is positive development in both the operational but also the financial KPIs over the last quarters. For KDI, we have a 2025 target of NOK 2.8 billion in revenue, with a share of recurring revenue of 95%. The key driver for this development in the growth is the growth in number of Digital Twin and connected vessels. This target implies approximately 100 Digital Twins by 2025. The reason why I'm saying approximately is that the revenue is to a large extent driven by the number of users per asset, and that will vary it. Nevertheless, 100 Digital Twins accounts for approximately 4% of the world's oil and gas assets, so it's not a huge percentage.
That also implies that the market potential is huge even before counting in other relevant verticals like batteries and hydrogen, offshore wind and chemicals. To realize the growth ambition for the Vessel Insight, we need to connect approximately 8,000 vessels, which then equals to 13% of the world addressable fleet. The KDI's existing customers already represent actually a fleet of almost 4,000 vessels. If you combine what we already have, all the vessels that are having KM equipment installed, which is 30,000 vessels, we are already an established player in the market and a brand in the market that we are addressing, which I think puts KDI in a very good position.
With that, I'm very pleased to give the word to Andreas Jagtøyen, which is the EVP for the Digital Ocean. He will be followed by Shane McArdle, which is the Senior Vice President of Digital Energy in KDI, and they will give you some more insights on these two main market drivers. There is Andreas. Floor is yours.
Thank you, Geir. I think you could just continue because I'm talking about your main domain, I think, the Maritime. My name is Andreas. I'm happy to be here with you today. I'll give you some introduction to Digital Ocean, which is one of the three divisions. I think this slide is showing a little bit what we are trying to achieve in the market here and what you see here is actually both Kognitwin, which is Shane's area in energy, and Vessel Insight. It's actually relating to each other. We are using the same common technology for the edge, for instance, to bring data from the asset.
We also are collaborating because the energy companies, for instance, they use ships, vessels as their midstream segment, and thus, of course, to integrate value chains is very important for these large, companies. That's why it makes a lot of sense actually to address both of these, segments at the same time. We also have a lot of, common, let's say, components in here. We are all, as you said, Geir Håøy, we are all working on the edge and to mask the complexity there. The control systems and the heavy asset are all different. We need to create technology that automates the, let's say, the onboarding of the data, and then we need to mask the complexity in order to bring this into a common, interface to the applications.
This is the big part of what we are doing, and this is not for everybody. I think there is where the Kongsberg, let's say, culture and the domain knowledge really comes in. I will give you a little bit more introduction to the Ocean Division. Vessel Insight was introduced briefly by Geir. It's where we actually connect the vessels to the cloud to make it very simple. It's consisting of two different tier levels, which I will come back to. Then we have the Maritime Simulation, which is an area of 30-40 years of experience developing simulators for training and education of seafarers. also lately becoming more and more relevant for engineering and also to plan operations in the Maritime space.
This is why we developed what we call K-Sim Connect, which is actually a platform for deploying simulators in the cloud, making it easy to do remote training, for instance, in order not to travel to a facility to train. Also to deploy simulators in the cloud to generate synthetic data for machine learning algorithms, for instance, in addition to data coming from the assets in real-time. Simulators are really important for us, going forward and for the industry in order to make, let's say, the digital transformation come true. We have, as Geir said, an ambition of securing 8,000 vessels, in 2025, end of 2025, with NOK 1.2 billion in revenue, which is quite a steep growth.
If we believe in digitalization and shipping, this is should be really realistic, also given the position that Kongsberg has in Maritime. I will try to give you a little bit of an introduction to how we see the transformation going, and I think this is not something that is switched on and then it works. Digitalization is a journey. It takes a lot of changes to both in the culture of and all the operation of the vessels, but also how the different stakeholders, the Maritime are collaborating. There is no shipping company in the world that can do this alone. They need to collaborate with their stakeholders, which is the charters, the insurance companies, and all of the others. Where we currently are, we are at the beginning of this journey.
I think all digitalization starts with data. This is what we have done now and are scaling rapidly. We have more than 500 applications available in the Maritime space for feeding on this data and to create value from it. The challenge is that a ship operator cannot use 500 applications to follow through a workflow in order to conduct a journey from A to B, for instance. We really need to bring a lot of this functionality together into integrated work surfaces where all the stakeholders can find and get access to the data they need, but also to visualize the workflows they are using. We need to relate to a lot more to the workflows in order to make a more efficient future for shipping.
Yeah. I will cover briefly on the status of Ocean and Vessel Insight in particular. We are really seeing now the maturity increasing in the market. This is the first and foremost proof point is that we are now able to convert, let's say, potential in the fleet from proof of concepts and test installations into fleet rollout. I think that is the first sign of early maturity. There is really a pull in the market for the applications related to fuel and emission in particular, but also other areas. We have a proof of the pudding, and I think Gyrid and Geir stole my point here. We are really successful in securing new contracts now, so we have a very good pipeline coming up.
We have, I think we are addressing a market for north of 60,000 vessels. There are more than 100,000 sailing out there, but a lot of them are old and are going into, let's say, sunset. There is a big market out there, and we perceive 20% of this market to be what we call the high-end segments, which are in early maturity stage or earlier, or in more improved than the others, like bulkers and tankers. We are now actually rolling out Vessel Insight for those main categories you see listed there, LNG, LPG, offshore and container. We also have signed now fleet agreements on tankers, which is one of the volume segments that are later to the game when it comes to maturity.
We are addressing the market with two tier levels, with the Connect, which is demanding a computer or an edge computer installation on board, where we can aggregate and sample data in real time into the cloud. We have the access level, which is based on manual reported data, where the ship crew is keying in data every day, which is a normal operation on board. Of course, we are addressing the market primarily with the Connect solution. What are the market asking for now when it comes to value proposition? I think value of data, the data cannot be locked in. The data is on the ship, and it is available in the cloud, but it does not give any value.
We cannot just sit every day and look at a screen and a report and so on. We need something to give advice based on the data. That's why applications come in and are really important for us. We have now around 40 applications available in our marketplace, which are linking to the data coming from the vessels. We are investing heavily in our own application development, and we have also taken over two very strong application teams from my colleague here, Egil in the KM, where we are going to put this into a complete portfolio for digital applications. We are proud also to be signing up now a lot more international application partners.
For instance, a company called Alpha Ori, which is a part of the Singapore tech environment. Singapore is really important for shipping as well. Also a Greek technology company called Metis, which is also very successful in the Greek market, which is also very important for shipping, as you would know. We have now secured more than 700 new vessels as contracts this year, which is a rapid growth from around 1,000 end of last year. I'm also happy to see that more than half of this is actually on the connect tier, which is with an edge computer and automating the sampling of data. We have a fleet pipeline or a sales pipeline of more than 4,000 vessels.
Most of them into customers that we already are working with. As we have seen, the maturity is coming now, and we see that more and more are actually converting from just a few vessels in the fleet to a complete fleet rollout. I would be happy to disclose some of the big contracts, but I cannot do that by name today, but we have signed two of the very biggest shipping companies in the world on Vessel Insight Connect the last quarter, which is something we are very proud of, obviously. As there are many others, of course, we need to convert, let's say, order intake into revenue.
This is of course a challenge in the market, getting access to our scaling up the delivery organization, but that is our prime focus now, and we are really working hard together with our sister company, KM, to make this successful rollout with all the contracts that we are securing. Last slide, a summary. Summing up, just, there are three ways of expanding our business on Vessel Insight. Of course, securing more vessels and fleets. We can of course then also expand through our ecosystem with applications, selling more to each vessel. Then of course moving from the access tier up to the connect tier, which is more let's say giving more value to the owner, but also of course to us.
With our K-Sim Connect solution, we are now able to do remote training of seafarers and the crew. Complexity of shipping is really increasing, and it comes from Maritime and others. They are selling a lot of advanced equipment. People are not able to handle it without training. The new fuel types and everything coming into shipping now, they really demand a more, let's say, updated crew. This is where we are targeting with our K-Sim Connect solution. Of course, we have to grow the organization as we grow the business. This is the prime focus for us as well. I will hand it over to my dear colleague, Shane, to take you through the energy part. Thank you.
Good afternoon, everyone. Thanks, Andreas. I'm gonna take you through digital energy. What does the energy market mean for us? Basically, it consists of customers who operate, produce traditional hydrocarbon assets, but also includes renewable assets as well, and it includes the integrated value chain between those assets. We provide a suite of software tools and services that help them operate, maintain these assets in a safer, secure, more sustainable and profitable way. Today, we represent 31% of the business, and we have 2025 targets of NOK 1.1 billion in revenue. Supporting that number and sitting behind that number is about approximately 100 twins. I think, Geir Håøy, you mentioned not all assets are made equal. We have both small and large, but on average, about 100 assets would support that number.
The industry, right now, is in a very turbulent and rapid change, but that's actually helping us. It's helping us to drive adoption with our solutions. Primarily, we have the energy transition. We have to do this. Society is demanding this, and it's creating a lot of external pressure for these oil and gas operators. They've made big and bold pledges to be net carbon neutral by 2050. But just around the corner in 2030 alone, there's some significant targets that they have to hit. With the very unfortunate unnecessary war in Ukraine, we are also seeing energy security being elevated up on the agenda as well. What does that mean? It means that right now, demand is gonna exceed supply.
We're facing an energy crunch right now, and you're all feeling it in your pocket, I would say, every single month with your energy prices being lifted. What do we have to do? We have to extract more hydrocarbon molecules from the existing infrastructure. That's what we have to do right now. In addition to the energy transition, which we have to support and drive and accelerate, we still have to invest into existing infrastructure in order to meet that demand. It's not going away. Underpinning that is operational efficiency, operational excellence of our existing infrastructure. Finally, we have a very new and young workforce coming into this industry. It's interesting again. Digitalization is driving that, I would say, attraction of talent.
They're coming in with a very digital savvy background, and they're looking to enjoy the same level of digitalization that they have in their day-to-day lives, in their work lives. Again, it's driving adoption of our technology and our solutions. Data and access to data really drives a lot of the decision-making in the day-to-day industrial assets. That then is connected to how we work, where we work, and how we actually execute that piece of work. If you think I see a lot of iPads out here and smartphones, and you just think how the advent of the iPhone has changed how we all interact with our personal data. You know, we have insights on our health, fitness tracking. We communicate with our family, friends. We work through these smart devices. It's fundamentally changed through the lens of a smartphone, how we live our lives.
We're building an industrial work surface that provides an end-to-end experience with your industrial data. It provides insights into your assets, and it's also a place where you execute that piece of work. If you don't connect digitalization, if you don't connect it to a business improvement or business output, it's not really valuable. You have to digitalize with purpose. You can't just have a data platform strategy or an AI strategy. It's meaningless. We're an industrial software company, and what that means is we codify our domain experience into our software products and then connect them to business processes. That means that we're developing software, industrial software that's very intuitive and very adoptable by our users, and we're scaling across a lot of our users.
Right now, we're seeing as a SaaS offering that we can scale very quickly across a single asset here and bring value across many different areas. The business processes are listed down there, and I'm sure you can read it later on. You bring immediate value, efficiency, collaborative ways of working, safety. Then once you want to scale up and across an organization, across your fleets of assets, to be able to enable other business processes such as energy management, greenhouse gas emissions, it's very easy to do that with our technology. The energy value chain and integrating that energy value chain, it's not possible today. It's not done today. When you start integrating offshore wind, hydrogen, carbon capture into your existing value chain of traditional hydrocarbons, it's not making things easier, it's making things even more complex.
In order to do that, the way we operate the plants today is gonna be very different than how we operate the plants of the future. We're gonna have to use digital technology to augment human decision-making, and that's gonna happen inside a Digital Twin. Moving from being automated to fully autonomous operations, it's not a single step process. It really isn't. It's a journey. It's not just about a simple technology decision. We have to consider safe and dependable operations. We're still a very safety-critical industry. We have to focus on business improvement, efficiencies and value. Black box analytics or wide-scale adoption of AI, it's not happening because it's unknown, it's unexplainable. That's not something we can have in a safety-critical industry.
Our approach that we're focusing on the hybrid machine learning or hybrid AI, this is something that lends trust and will scale across an organization. It's a mixture of physics-based models, which we trust and know, constraining pure data-driven models with extremely fast and extremely, I would say, quick to scale as well. We're constantly pushing the envelope to the right here. What we're focusing on, I mentioned already the business processes, workflows, enabling that. The more and more we can automate, the more and more waste and inefficiency we can take out and efficiency we can put back into these assets. Once you simplify that, the more you can simplify a business process, the easier it is to have wide scale automation. That's our North Star here.
We're linking everything from our digitalization approach down onto the business and workflows that we can have impact around. We're constantly, and Geir Håøy, you mentioned it, we're constantly driving down the time to value. How quickly can we deploy? Right now, we take advantage of a very scalable software and technology. It's SaaS. It's built in Cloud. I t's web-enabled. We have economies of scale in Kongsberg we've taken big advantage of. We have centralized global capability sets, but also we can locally support our customers for where they are based. It's big advantage. We're also industrializing, continuously industrializing our software. We're making it more system integration ready. Not just us, not just for us to speed up deployments, but also for third parties to be able to do it as well. The strategic revenue for us is the recurring piece of the software.
Today, we are actually deploying to assets that are 9x times bigger, 9x times more complex than assets we were doing two years ago. We're doing it in a more condensed timeframe than we were doing it two years ago. Much bigger, much more complex, and we're doing it faster. That's real testament to how mature our product is and how scalable our product is becoming. Across the board, we're adopting the platform piece, we're adopting across users, and we're adopting our application sets as well. Today, the core part of our market is still served through the traditional hydrocarbon, which you can see down here. That's what we know. It's where we come out of. It's where we have a lot of trust and relationships, and we're doing very, very, very well here. Obviously, we're gonna expand. We're gonna carefully expand.
We're not just gonna take a shotgun effect here. We want to walk into and step into adjacent markets that make sense for us. There are three areas that we're focusing on right now. Up here is process manufacturing, chemicals. It's a very simple right step for us. We can actually lift our technology as it is today and put it into this market without writing a single new line of code. It's very scalable, hyper scalable, in fact. Renewable energy, I'm a firm believer that the energy industry will solve this challenge. It won't be solved outside. You'd have outside pressure, regulations, carbon tax, et cetera, but the energy industry has the capacity, the capital, the wherewithal, the ability to be able to solve and build these projects. We're moving in line and in pace with our integrated energy customers today.
As they build out these facilities, offshore wind, hydrogen, carbon capture, we're there to provide the digital infrastructure to support them. We're moving very carefully with them and in line with them. Of course, traditional energy. Even before this very unfortunate war and very unnecessary war and tragic war, the amount of investment into traditional energy between now and 2030, in addition to renewable energy, was between $600 million-$800 million every year. Why we know this is gonna tip, it eventually is gonna tip in favor of a more renewable mix over the next 10-20 years, there's still continued investment here. There's an onus on us, a duty on us to actually bring down the carbon footprint of this existing infrastructure. We can't just let, oh, we'll wait until everything is offshore wind.
We have to do that now. The World Economic Forum came out stating that 20% of all carbon footprint can be taken down through digitalization. That's a big impact on existing infrastructure that's gonna live out for the next 10, 20, 30 years. This is a sum up, the final slide. The future of the energy industry is integrated. What you're seeing here is actually a concept of an energy hub off the west coast of Ireland. I come not far from this location, actually. So there are a number of actors here. There are offshore hydrogen, offshore wind. We have LNG, FPSO. But in order for this hub to be net carbon neutral, they rely on each other. They're fully integrated.
If you want green hydrogen, you have to use offshore wind to actually produce the energy that actually the electrolysis systems are run on. If one element fails, every single piece of this hub is impacted. If you don't have a digital twin to be able to operate and augment the human intelligence up and across a very complex and integrated system like this, it just won't work. It just won't work. We're very well-positioned to actually deliver on the future of what energy is gonna look like. Thanks very much.
Thank you, Shane. Andreas and Shane, can you stay on stage as we open up for questions for KDI? Are there any questions from the audience first? Yeah.
Sure.
The middle here, yeah. We have one question from the webcast that I really think goes to the CFO. If the CFO can also get a microphone. The question comes from Hans Erik Jacobsen, Nordea. With regards to KDI, when do you expect KDI to become profitable?
Of tomorrow. On my wish list. No, we think about in the end of 2023, we have some plans. If I should answer very correct, I would say 2024.
Thank you. Any questions from the audience? If not, you, Andreas and Shane will stay here throughout the day as well. It is possible to ask questions later. We'll take a short break, and we'll start up again at 2:15 P.M. sharp.
It's clearly Kongsberg Maritime is a nice place to work, and very fun for all those who are allowed to go out in the field and be a part of that. I'm only in the office, so maybe not that fun for me. Okay. The organization we have has been quite unchanged for the last approximately three years. I will give you a short intro on this, on the first slide here. We have four product divisions, and I will underline and I think also be proven over the last years how robust this organization is. It is robust because there is a lot of products. We are operating in a lot of different markets, so even though something happen in one market, there is always opportunities. Each division sell their separate product.
They sell their products as systems, and integrated systems are building up concept systems of all the products of Kongsberg Maritime. Deck Machinery and Motion Control, the unit that is most forward-leaning when it comes to offshore wind, and are very involved in that, all these units is making money. If you take the total of new sales and aftermarket, they're all making money. Sensors and Robotics, very unique. We talk high tech, software and things. Here is physics, so it's really to stretch the limits down to the physics of it. So it have a number of unique high tech products. Fishery, world leader on seabed mapping, of course, autonomous robotics, really good asset for us.
Propulsion & Engines, including aftermarket, probably the largest part of our business, and the aftermarket of this business is, of course, very attractive as well and is explaining much of the success of our global customer support that Geir is so happy with. Integrated solution is, it's a very broad portfolio. They do the visualization, automation, DP, ships design. They also have their power electro automation systems. Global customer support and global sales and operations. These three organizations is taking care of all the four product divisions. We do not have one sales organization in each 34 country for each of these divisions. Global sales, 500 people globally, probably one of the most potent sales organizations in this industry. Have a presence all over.
Global operations for more than approximately 40% of our employees. Global customer support is giving us the stability. I would like to introduce to you, Tejbir Singh. He is head of strategy and analytics for Kongsberg Maritime. If anyone can tell you about the market future for us, this is the guy. Please, Tejbir.
Thank you, Egil. Of course, no pressure at all. Here we go. Okay, what I'm gonna do is I'm gonna start by taking you through a market view. Of course, we operate across a pretty wide range of markets. I'll start out by pointing out that, you know, obviously the market is really dynamic, and Geir Håøy took you through some of those sort of factors we're dealing with at the moment. There's a number of headwinds, but there are also a lot of tailwinds in some of the markets that we operate in. On the one hand, we see that there's a, you know, there's a geopolitical sort of impact right now. There's inflation, there's a COVID lockdown in China that affects supply chains.
The IMF has come out and cut their GDP growth forecast by 0.8%, between January and April, and potentially there'll be other downward cuts. But on the other hand, we're also operating in an industry that is really looking for energy security and energy transition. Energy independence has become so much more important now. We are forecasting that in the coming period, we're likely to see a time where the offshore oil and gas and the wind growth coexists. That's very good for us because we have a good exposure across both of these markets. Of course, on the oil and gas side, oil and gas companies are awash with cash with oil prices where they are, and this is gonna make its way into existing and new fields.
Also then governments are opening up new fields and offshore wind. Energy independence is a big driver, sustainability is a big driver there, and that's a growth that we see coming for several decades to come. At least midterm, both of these are gonna coexist, which is a positive for us. Now, on the cargo carrier side, of course, seaborne trade is very correlated with GDP. GDP rates start falling, then seaborne trade typically also starts getting impacted. There's a support mechanism there at the moment because world trade is changing, and it's changing because of the geopolitical climate where goods that are energy, you know, could be coal or food grain like wheat. If it's not coming from countries that are next door, then it's coming from countries further away. That's a support for ton miles.
While we expect that, you know, economic growth might slow down, that'll take down the seaborne trade, but the ton mile trade will fall less because the trading patterns are shifting given everything that's happening with Russia and Ukraine. Now, the cruise and passenger market, a very interesting one, decimated after a period of sustained growth for a long time, because of COVID. Now they're just starting to taper up. Activity is picking up again. People are booking holidays. Of course, it's a discretionary spend, so that means that if the economic climate dips quite a bit, then we will likely see some negative impacts there. Right now it is emerging from that COVID phase, and so that's a positive sign for us, and we'll see early signs of that in the services business already. New building probably a little bit further away. Naval.
This is an area where defense spending is going up in Europe, and that's because of, again, the geopolitical climate. Naval likely to stay resilient and robust. On the aquaculture side, record high salmon prices, they're driving up results. Fisheries, for them, fuel is a big cost. There, I think the economics will be dampened a little bit because of what we're seeing with fuel prices. Maybe ordering will slip a little bit on that side. If we really look at some of these markets that we're operating in, you get a kind of sense that, yeah, there are some macro indicators that are unfavorable given everything that's happening in the world.
If we go down and drill down into some of our markets, and many of these, if not all these markets we have a position in, some of these are positioned for a sustained period of growth. We have other dynamics at play that we think will provide resilience for us going into the future. Let's take a slightly deeper dive then into our Maritime markets. The graph you see here on the left-hand side showing commercial markets, so excluding naval, but commercial markets and how they have developed over the decades. Of course, the first thing you pick up is Maritime markets are very cyclical and volatile. It's a big boom, and then that sort of came down in about 2015, 2016, when oil and gas was down, but then the cargo side also dipped.
We had a few challenging years where we had to navigate a very different market dynamic from 2016, 2017. The market was just starting to pick up and then the pandemic came, so that slowed it down a bit again. The resilience with which it came back in 2021, in particular on the back of container shipping, was a big positive for us last year. Right? What we think is gonna happen now looking into the future is at some point, container ordering will probably slow down. The economic indicators will indicate, you know, that new building prices are particularly high. The new building index is sitting at highs we haven't seen for a long time. That could have a dampening effect on the cargo side of the market, but then there's value to be had in many other pockets of this market.
Overall, the midterm to long-term trajectory is still very strong, partly because we're looking at changing trading patterns. We're looking at energy independence and a green shift, and we're also looking at an aging fleet of vessels that were built over the last few decades in this big boom that will come up for renewal with greener, more efficient vessels. Either they will be upgraded or they will be new vessels ordered that meet the environmental regulations coming. They'll be more future-proof in terms of their fuel choices, so this is gonna lead to a sustained period of growth in our core markets. Now, if we look at the graph on the right side here, this is a temperature chart that we typically use to show market sentiment.
Now, market sentiment here, you know, typically includes things such as, you know, its activity level, utilization, charter rates, and often then leads to new building as well. Although in some cases, not necessarily immediately, more so on the aftermarket. The sentiment, really, if we were to look at this graph, you know, say about a year ago, you would have seen that cruise and oil and gas were really in the low territory of activity. Sentiment was really dampened. Right now, a year later, we're seeing that, of course, container is extremely hot. LNG has done very well. The dynamics for growth with AUVs and USVs where we're well-positioned is strong. Wind has been doing well.
Some of the laggards that were really struggling through the last few years, such as cruise and oil and gas, are just starting to pick up a little bit now. Sentiment is lifting, and we're seeing that on the aftermarket side, if not necessarily on new building just yet. This dynamic really means that, you know, Maritime is a volatile market, and those of you who follow it closely are well aware of that. Some markets will go up, and some will come down. We have exposure across all of these. Unlike, say, 10 years ago, when a large part of the order intake came from oil and gas, today, there is order intake across all of these areas, and that builds a natural resilience into the business because we target all of these areas. Some will ebb and flow. Container probably slow down.
We'll see oil and gas pick up at some point. Wind is still resilient. We'll see that dynamic play out, but for us, there's a resilience in being able to tackle the cyclicality and converting it into an opportunity by addressing it in a diverse way, right? Now, to elaborate that point on the market a little bit further, we've got here two graphs. Now, the first one here on the left side is looking at the market outlook for our key commercial markets. This excludes naval and some small vessel types. In terms of number of vessels, and then we look at the graph on the right that covers the same market, but in terms of value.
What we've done for the value is just take today's portfolio and apply the typical scope of supply that we would have on these vessels on top of the number of vessels to come up with a market by value, just to see, is this the same or different to where the number of vessels are? In this market, typically, if you look at the commercial markets, the volumes are dominated by the cargo carrier segment. This is bulkers and tankers and container ships. You know, typically 60%-70% of the volumes will come out of this market. But when we apply our typical portfolio on top, the value-wise, this is about 35%-40%. That's where it normally sits.
If I take another example, which is the offshore wind market, which typically in terms of number of vessels is about 1%-2%, and convert that to value, it goes up to 7%. What that's really telling us is that our scope of supply is quite different. For some markets, we have a strong position with a few products. In other markets, we do products, we do integration, we have ship design, and we have a holistic value proposition that goes beyond a few strong products. That means that there's value to be found for us in markets that even though the volumes are very low, our scope of supply is strong. Just a couple of examples here. On container shipping, typically our scope of supply would cover 3%-10% of the value of the vessel.
Whereas on a wind vessel, it would be 20%-30%, given the larger scope that we have. That variance means that even though the number of vessel picture looks very dominated by cargo and tugs, you end up seeing that while we have strong products here, value can be found in some of these smaller areas that don't come out strongly on the number of vessels but are great opportunities for us. A further positive is many of these are set for many years, if not in the case of wind, decades of growth to come as we move from fixed to floating, and then the opportunity for us to make a further difference with more complex equipment increases. There's value to be found in many parts of our market.
Again, a key message for here is that rather than relying on one part of the market for growth, there's a diversity. Again, it helps us manage that volatility and cyclicality in the market by being able to address a broad set of areas of the market with a strong value proposition. I'll also cover a little bit the trends that are impacting our markets. Of course, you heard a lot about these trends from the digital side already, very linked. Obviously, digitalization is a key part that Katie and I mentioned to you earlier. Smart data, analytics, platforms, clouds, applications, connectivity, remote services that will, you know, really became so important, particularly in the pandemic when we couldn't have people traveling.
Advanced sensors with higher fidelity that support this growth in the future with digitalization by being able to capture better data and process it on the sensor. Cleaner fuels, that's definitely going to be something that impacts the next decade or so, or if not decades to come. Because, you know, the IMO has announced a 50% greenhouse gas reduction target by 2050 as a target, and then leading up to that target, we're going to see a more diverse fuel palette emerge in the Maritime space. Potentially different fuels for different applications will come up. Electrification and energy storage, a continuing trend, again, an area we play strongly with. Robotization.
This is an area, again, we play in with the HUGIN platform, AUVs and USVs for seabed mapping for inspection, maintenance, and repair operations, not in oil and gas alone, but also in the emerging area of wind. This will be a great opportunity. Remote and autonomous. We have several key projects that we've taken now initially. This will start out typically with smaller vessels, where the CapEx, OpEx picture means that, you know, the manning cost is a big part of the OpEx. There's a business logic to going to remote and autonomy before eventually making its way to larger vessels. Start with smaller ones. Integration as vessels get more complex, different risk share arrangements. There's a number of trends coming over the next decade, and we have the opportunity to make a difference across all of these.
One thing we're very conscious of as we go out and innovate, and we invest in our R&D, and look at leading the market with so many of these areas, is that we want to innovate with purpose. That purpose is to have a very close awareness of what customers are looking for in our markets. Customers will typically ask for operational efficiency. How can your innovation help us reduce CapEx or OpEx or increase profitability? They'll ask for safety, security, and reliability in terms of, can you reduce downtime and increase crew safety? Increasingly over the last few years, they're asking for sustainability. Now, sustainability, you know, a decade ago, there was sort of some lip service to it, but now it is a very serious customer requirement, partly to meet requirements, of course, but also stakeholder expectations.
We're looking to innovate, and there's a range of other sort of requirements and different segments, but these three come out repeatedly among all our markets. We are looking to innovate, but innovate with purpose, where we actually have our innovation meet some of these core customer requirements, so we can actually have a win-win. We have a good value proposition, we have market-leading innovation, but it helps the customer and the need they're looking for, these three being the primary ones. Okay. I hand over back to Egil.
Thank you. I know a few people who can say more in a shorter time than you. Okay. We have delivered as promised. To run an operation like this is a balance between a good operation and a quarterly need of results. At the same time, we need to invest for the future. Now I'm going to focus more on the future here. I think we have delivered so far. Here is examples of a contract that is connected to new markets and new technologies from us, and later on, I will go even more into the future. Hurtigruten, a hybrid upgrade of three ships. Extremely interesting project. As the requirements to reduce emission with 30%, 40%, 50% over the time going forward, we also need to look at the existing fleet and what we do with this.
For Hurtigruten, we have done a significant improvement with existing assets. We are reducing the emission by between 25%-30% on these ships by changing the hull, changing propulsion systems, rudders, most of all, to change the energy systems, battery and digitalization. It's connected to Vessel Insight, and we have controlled everything in detail of this. This will give us a significant improvement of emission. This is one of many examples, and if you see how many ships out there that need to be improved over the next year, very interesting market for us. In offshore wind vessels with subsea, a remote subsea support vessel. A new step, I'm going to say a few words later about autonomy and remote. Very interesting. Third, fish farming, live fish.
Each of these contracts, I want to spend the time to go into every one of them, but average for the three first here is approximately NOK 400 million each. As Geir Håøy pointed out earlier today, NOK 2 billion on offshore wind. Six years ago, when I started in Kongsberg Maritime, the history was oil and gas very much. It went to zero. New build oil and gas is close to zero today. Now we are in oil and wind and renewable, and we really have managed to do this change. This market is coming up now so significant. I'm very proud of, and I'm very happy to see how fast the world is changing from more traditional oil and gas and into renewable markets. We truly have an international global organization.
More than 50% of our employees is outside of the Nordic. The Nordic is our home market, Norway, Finland, Sweden, and even U.K. It is not to have an office, to start a new office in, somewhere out there. In the main hubs like China, Singapore, U.S., Korea, we've been there for 20, 25, 30 years. In many of these countries, we are considered to be local companies. You don't do that from one day to another. It take 30 years to really be established and to be one of them. We have local employees. We speak the language, we understand the culture, and we are a part of those industries. Very important for us. As COVID hit us, the value of being able to support your customer all over the world, it's extremely valuable.
We have so many feedback from customers telling us that no one else are able to support us the way that Kongsberg can. It's been very valuable. Going forward, 'cause we're all concerned about first it was the containers and all the logistics challenges, and then it's components, and then it's capacity, access to brains, and all this. For us, this is normal, and it's always have a flip side. The containers shouldn't be very hard to understand that that would be good for container ship owners. We saw the shipbuilding coming out of that. Yes, it's always some hassle that we have to deal with with the logistics. But that is minor compared to the market opportunity that brings to our markets. That is the case for all of this.
There is on one side, when an international activity is growing, it is adding some problems, but on the other side, it is giving us market opportunities. This organization is, as I told, very robust. We have sourcing centers all over the world, and especially both in Asia and in Europe. We are able to deal with these things. Look at the numbers here. We are ordering 13,000. We are sending out 13,000 orders for suppliers a month. It's not a year. We are signing up about 5,000 contracts with our customers. You need a good professional organization. How do we do this today? I heard this inflation. We used to take that as well.
Yes, inflation is difficult because most of those old people are also young, they never heard about it. The prices on ships have been down for 15 years. We are doing repetitive projects now with prices up 15%-20%. In a way, this is a good thing because we cannot continue to zero. This had to happen sooner or later. Yes, if we do this wrong, we could end up in the middle here with the suppliers having inflation and customer not. We are not born yesterday. We are dealing with this in a professional way, and we are very hands-on. Every single large contract we enter into now, we are in direct contact, sourcing sales.
The moment we sign the contract, we are securing the main value of the supplies for the existing prices in this moment. Yes, and also components. We are long-term. We have quite some stocks, and we typically for the mainstream of what we do, we secure ourselves for one to one and a half year with volumes. For this standard thing of what we are doing, it is really not that big issue. Then with 30,000 orders, 13,000 orders a month, there is always something. We have quite a lot of people now to that have to work to make this flow go well. We do this well, and it's not without problems, but it's not what keep us awake in the night.
Lately, the last couple of weeks, Shanghai has been the main hurdle for us when everything closed down. Okay, now they open up again, and a few weeks from now, it is probably back to something called normal. It will be something new. This is what we do, and we do it very well. We are very close to our customers, we are very close to suppliers. We have our own design quite far down in the components. We are able to redesign and we deal with it. It might be some project that is delayed, but we are more happy with the market and what opportunity this time is bringing to us. I might get some questions on this later. It's challenging, but we are dealing with it.
I changed to Yara Birkeland. I guess we're all tired of seeing that picture. It is going, and it is going to be executed. There is ASKO, and we have Rich, and we have here the new kid on the block, DB Schenker, Ekornes, that also want to go into this concept. I tell my sales, slow down. We don't need to sell it all the first year here. I would like to see this up and running in full operation before we enter into new contracts. There is a push in this market, and there is a progress. It is complex also because there is regulations. It's a full value chain. It's not only to get the ship out there to Brevik.
That is not the main sort of challenge here. This is happening. We are leading. We are number one. It is a huge market there, but we need to take the time it takes, and we will try not to enter into too many contracts at once here. It's a very clear area where we are number one in the world, and where also the existing normal ships are benefiting from the technology that we are developing here. Geir Håøy told me that we need to say something about all these fantastic products that we have on out of Horten. I will give you a short update on HUGIN. I think the last time we ever talked about it in this forum, that was what we had. It is getting bigger and bigger.
What is the unique performance of this? It has to know exactly where it is. From generation one until today, it's a huge improvement. It has to go deeper and deeper. This is going to 6,000 meters deep. You need to have a value in all the sensors you bring with you. You need to have power to operate it for a long time and a long range. You need a big brain because you cannot communicate with it. When it's out there, so it needs to do everything by itself. This last version, it is going to operate for 14 days without contact. Today, the maximum is three days.
It's not a 10% improvement, and it will know exactly where it is, exactly what it need to do, and it will have the unbelievable capacity on the sensor side. If anyone want to compete with us on this, and we are on. There are other unmanned vehicles out there, but there is no one close to this. We are, as usual, when you come to the high end, it's always us. When we are down in commodity, we might struggle from time to time. But when we are on the high end, it's always our products. I just, so you can know, if you want to start this, it's everyone can do it. The only thing you need to do, you need a customer that you work with. Then you need to take this stepwise.
After 30 years, you will be where we are today. Okay, offshore wind floating, I guess we all are very keen to see how that progress. We are very close on this. We very much believe in it, and it is representing a huge opportunity for us as a company in the marine operation, in maintenance, and in all our sub-sea activities. We also believe that there might be other things that will be of interest for us. This is one of the things that make me very optimistic long term. The other thing is energy in general, with these new requirements that is put on the ship owners and all these ambitions globally.
Just to mention it, for batteries and also power management that we have done organically over the last four or five years, we reached a revenue over NOK 1 billion. When we focus something, it's NOK 1 billion here and NOK 2 billion there and NOK 3 billion there. It's a lot of new stuff going on here. We make batteries also for marine application, and it is a fast-growing market. It is not only to be the propulsion system for ferries. Every single ship will have in the future some sort of batteries because you will have need more efficient ecosystem or energy system. It is what is the future? How are we going to meet the future requirements? We are very happy we are not engine manufacturer.
I think we could be if we wanted, but we decided not to do that because there will be winners and losers. We are in the flexible side of that. We do the energy management systems. We do hydrogen. We do sort of whatever is needed and whatever the future will ask for. This is complicated. I wouldn't bet my money on one of the solutions. It will be a number of different solution for different missions. I hope everyone know that hydrogen is not the energy. Hydrogen is the energy carrier. You need to find a green energy to start with, and then you can carry it with hydrogen. First, you start with batteries for short distance. If you need more, you can go to hydrogen. If you need more than that, you might go to ammonia or biodiesel or something else.
The ambitions is not supported by technology today, but for us, it's an ocean of opportunities. Very interesting for us going forward. I see everyone look at the watch. I'm always spending too much time, I know. This is my last one. Kjetil, fantastic. I always wonder, what did he really say? Is the market good or is it not good? The market is good. For the long term, it's very good. It's for what is going to be required of ship improvement or upgrades and for new builds, it is a huge market opportunity. You go to the production of energy as offshore wind, fantastic. We have probably the best position in the world to be number one in this big transitions.
Short-term, I guess all of you see our numbers, the sales is very good. The market is very good. When I took over after Geir Håøy, I thought this should be easy. It has not been easy, but lately it's been a lot better because we have a market supporting us. What is the medium term here? Because there is a dark clouds when it comes to the general finances of the world, and we need to cool it down. How will that impact us? We are very strong in energy, both all the oil and gas, but also in the new energies and the renewables. LNG, because all the new energy need to be transported from one place to another. LNG is one of our largest markets.
I would say I'm very optimistic also on the shorter and medium term. The best way of predicting what is going on tomorrow is to see how it is today. I must say I never seen a better future in this industry than what I see today. I'm sorry I spent too much time.
Thank you, Egil. We do accept a few or have time for a few questions from the audience as well. If you have any questions, raise your hand to either Egil or to Tejbir. If not, I suggest we'll save the best questions till the end, and you'll come up on stage later. After a short movie, you will get the presentation from Kongsberg Defence & Aerospace.
Good movie?
Yeah.
I thought it had pretty good scenes there. I have more if you want to see. Oh, thank you. I appreciate to stand here and talk about Kongsberg Defence & Aerospace. Egil, he put a good portrait on Kongsberg Maritime with a positive spin. I think also I can stand here to state that, I think with the Defence & Aerospace is also in a positive situation, also going forward. Hopefully, you will see that throughout the presentation. Last year, or couple of years ago, at the Capital Market Day at that time, I said we will generate shareholder values through profitable growth and also stated that we are positioned for further growth through our current positions.
I think I can state that we have delivered on those ambitions and hopefully throughout this presentation, you will see and then get an understanding of our next ambitions level are. This is just some facts about Kongsberg Defence & Aerospace, 3,500 employees, around NOK 10 billion at the moment in revenue per year, and we are growing in all areas. I must say that we are now lived with Corona for two years and also with the Ukraine war ongoing. I must say that I'm really impressed by the organization, how we have managed through these challenges, transportation problems, component issues, difficult to deliver systems. We have military customers, they're picking it up, so.
There's different ways of solving the situations, and I think we are pretty good in doing so. I would say for 2023, 2022, we have good visibility and control in all our deliveries in major programs. We are, as Egil said, experiencing some delays due to missing electronic components for our weapon stations that causes some delays. We are handling the situation and find new sourcing going forward. In general, this situation, we just have to be professional and handle it, so we're constantly monitoring the situation when it comes to this component situation, raw material situation, and make necessary adjustments if needed.
This is a slide maybe many of you have seen, and this is a slide I can spend 1 hour on. I try to make it short. We have five divisions in KDA and also some daughter companies involving Patria, KSAT, KAMS, and also KTA Naval Systems, the joint venture we have in the submarine program. I can't go through everything here, even though I wanted. If you look at Integrated Defence Systems, that's more of a system division providing system solutions, so NASAMS is part of this division. Since 2020, we now have 14 countries that has bought NASAMS. Very important for us, and you all seen the need for this in different operations.
On the army side, we are providing digital solutions here with the vehicle as an example, where we experience export contracts on other solutions. They also signed the submarine contract between Norway and Germany. Very important, where we deliver the complete combat system for the whole submarine. We expect this program to include new customers going forward as well. You see a picture of F-35, very important for us. We have now delivered components, composite and titanium parts to more than 1,000 F-35s, so quite significant numbers. We are at full rate speed in production, 180 ship sets, as we call them, and that's gonna be the speed going forward.
You can also notice that there are more and more customers buying into F-35. We have Denmark, Finland, Germany, Switzerland, all into the same club of F-35. It's a helicopter there as well, MRO, maintenance, repair, overhaul. Basically our comms operation. I would say that has exceeded our expectations in the sense that we have had the turnaround, and we are now seeing rapid growth in different areas when it comes to F-35 and also for the F-16, when Norway is selling that to other countries, where they will make use of it. We are growing also in the land system when it comes to our remote weapon stations. Now we are up to 28 countries, which has the remote weapon stations.
We have 100% of the US market, 80% in the world market. Missile systems with Naval Strike Missile and Joint Strike Missile, we are experiencing a significant demand for missiles. We saw that last year with more than NOK 10 billion in order intake. Going forward, we see a good potential for missiles. Space and surveillance, very important for us. We recently announced that we are investing in three satellites for small-type satellites that we will utilize and absorb customers to buy into the data we will transmit for those satellites. We these are the key takeaways I hope that you will see when we are done with the presentation. I will start with the continued growth. We are in a growth situation.
We started back in 2019 explaining the growth situation based on the positions we have. It's gonna continue, but we need to stay in there further develop our product portfolio, et cetera. Expanding our product portfolio in addition to staying ahead of the curve on other products is very, very important for us. Obviously, we have strategic plans to further develop our market access around the world. Sustainability is important for us. We have social and the governance part is has been for years, obviously very important. The environmental is now more and more on the agenda for defense customer. We will see that how we handle supply chain or are we thinking about circular economy and also requirements from customers.
For instance, a green proposal will be a requirement in the future, I'm pretty sure of that, also for defense purpose. You saw this in 2019 and also 2019. This was our ambition, securing the 100 billion NOK pipeline. This is mostly then organic growth for the next 10-year period, as we stated it. As you've seen, this, since then, we have seen a record high order backlog. As I said, missile order intake is high, submarine is there. We are now 14 nations users, et cetera, I could add on. I would say that this is still, this vision is still solid. Given what we have achieved and how we see the market, it's time to adjust this.
We will come back to that at the end. Now, I would like to invite Pamela Willgohs, Marketing and Sales Director for KDA, explaining some of the background here.
Thank you. Thank you, Eirik. Good afternoon. Pam Willgohs is my name. I'll spend the next couple of minutes trying to give you some insight into what we're seeing in the defense segment, the sector, and what we believe the implications will be for us and our business. If you look at the first picture on the left side of the chart, a lot of different titles we could have put on top of that particular picture. Nationalization is an area where we're seeing within Europe, especially within the European continent, there's a lot of focus now on what are national capabilities, readiness levels. What is their ability to respond to the crisis that they're seeing very close to home? Right? That's become a very different focus than we've had the last number of decades.
We've been looking at some numbers not that long ago that had indicated that the overall average increase of defense spending in Europe in the last 10-15 years is roughly 20% of an increase average for European nations. As compared to the U.S., which in that same time frame is over 250%, and China over 500%. Europe is absolutely, understandably so, been prioritizing other ways to invest. That changed almost overnight, 24th of February. Right. We've seen that Germany complete 180-degree turn from German policy prior to the 2024. We're seeing other nations committing to increasing spending. We're seeing focus again on their own stockpiles. What is it they have at home if they need to respond to a threat? That is a very important question many nations are trying to answer at this point.
Not only are they focused on their own nation, they're also focused on alliances, the EU, NATO, very happy to have bilateral, multilateral connections with other countries around them. Better to stand stronger together in this type of situation. What we've seen also within the EU is they've gone from being a regulatory agency to being a geopolitical actor. Right. Big change for the EU and for the European Commission. Important for us, however, because we are not a member of the EU, right? We're watching very closely those alliances that are building up within Europe, and I'll come back to that, why Europe is important for us because of those connections that are being established and strengthened. A lot of things we could talk about, as far as what's going on in the European region, and globally as well.
If we move then to the next picture, NATO, very interesting. Increases there, not only in the budgets, but membership. We have competed against Swedish industry and Finnish industry for a very long time. That's not new. Now it's very likely they'll be brought into the inner circle. Right? What does that mean for us? Very interested and eager to see if there'll be any changes in the competitive landscape for us from an industrial perspective. Swedish and Finnish industry, defense industry, very capable, very strong competitors. That'll be certainly interesting for us to see what happens when they come inside the realm of the NATO alliance. Budgets. Again, going back to what we've seen in Europe, a very minimal increase in investments from the defense side.
I saw a report not too long ago that said, Actually, this just came out. We have now globally passed the $2 trillion mark in global defense spending. $2 trillion. That was 2021. That was prior to the 24th of February. What they have said is if you were to accumulate all of the NATO nations and close allies and calculate what the investment is if they reach 2%, it's an additional $1 trillion that would be used in defense spending, if they were all able to do that. Not all nations are going to do that, but there's definitely an increase in investments and focus on defense. Very interesting for us to see what it is they're looking at procuring, what it is they want to buy.
What you're seeing, and you've all seen this in the news, they're buying what exists, right? They want to have something that's tested, tried, qualified. They have all the logistics. They have maintenance. They know how to train it. Those are the kinds of systems they want to buy. This is not the time that governments are saying, "We want to start a very large research program at this point to address this situation." That's not the answer. Which is interesting when you come back to our product portfolio, which Eirik just showed you all. I'll come back to that as well, how we're addressing the interest and the capabilities that we have and that we've had for a very long time. It's not just all sunshine and daisies every day.
There are challenges, and they've been touched on by others already with regard to transportation challenges, electronics, component shortages, all that's hitting us as well. And it's just on top of each other after we've gone through the pandemic from the corona situation, which is not yet finished. We are addressing that. We have very professional suppliers in our supply chain, very appreciative of that, and we have very long-term relationships with them. Fortunately, we have a very professional team as well as Eirik Lie does, in addressing and positioning ourselves as best as we can to address those continual challenges pop up from day to day. All right. Again, going back to what it is we're doing, these are systems you've all seen before, right? When I said, what nations are after are systems that exist.
They're tested, they're certified. Someone else has chosen this capability, which is a very important reference for new nations, new customers. When they have a need, like many European nations have now, these are very interesting capabilities for them. In some cases, we're getting new requests from nations that have not been in our customer pipeline in the past. In other cases, there is programs that have been defined further out in time and are being pulled to the left. They want them faster. They wanna make decisions. They've made decisions earlier. Maybe you've seen that in Australia, not in Europe, but an Australian near ally has pulled their decision for procuring NSM to the left by two years. Right? We're starting to see some of those effects.
What is also the case, however, is none of these systems are signed, bought and delivered overnight. Eirik Lie would be exhausted if he signed 5,000 contracts in a month. That does not happen in our business. We have a longer timeframe, right? What they're understanding, though, is that knowing that we have a longer timeframe, I think the first submarine is delivered before you retire, but still, it's a long time, right? They wanna get in the pipeline, right? They're understanding that we need these capabilities. We need to get our order in now, or we're not gonna get the systems we need. It's a very interesting effect in our segment at this point, as our European nations start to understand more and more of how they need to increase their readiness.
All of these systems are continually being advanced, upgraded, and modified to address new threats, incorporate new technology, and make sure they are still relevant, very interesting, and top of their class. I'm gonna give you an example. I actually just really like this picture, so it doesn't really help you understand what we're doing here. It's a great picture, right? NASAMS air defense system, been around for many years. What we need, however, to address the current situation, missiles that go longer, go farther and higher. We're coordinating now with the Norwegian Ministry, with Raytheon and with Nammo to develop an advanced capability that is indeed doing that, sending the missiles farther and higher to address threats, which also means you have to update the radar. You also have to update the command and control software to address that new capability.
It's just one example of how we're always working to make sure our products and capabilities are staying relevant and staying ahead of the curve, as Eirik had mentioned. It is a really cool picture. Okay, in addition to that, where Eirik had indicated, okay, EUR 100 billion in the next 10 years, achievable goal, but we need to do more, right? What are those strategic initiatives that we're addressing in addition to securing the pipeline, increasing the pipeline, what else are we doing to ensure that we're growing and are profitable in our organization? Naval domain, I'm gonna come back to that. I've got another chart to talk about more details there. However, that's a very, very important domain for us as a company. We've gone through the Maritime pitch already. You see the technologies and capabilities coming out of the Maritime sector.
We're looking at that from the defense side and looking at how we can pull through those technologies and build upon what we have. Space, I'll come back to that as well. Spend just a minute on global growth. Egil also mentioned this, or indicated this is an important aspect of your strategy, which is thinking globally but being local, right? Having a local telephone number, being able to speak with the same accent, understanding what customers or a nation is worried about, what they're motivated by, what they're planning on doing internally in a nation is much easier to understand when you're in that nation.
As an American, I can tell you, I understand much more of Norway than what I ever would have understood if I stayed in the U.S. and tried to look at Norway from afar, 'cause then very often it ends up looking very close to Stockholm. It is very important for us to have that global presence, but having people local for the exact reasons that Egil had mentioned as well. U.S., very important for us, very important market. When you look at the defense spending they have, there's no question it's important to be local in the U.S. Europe as well, as we're seeing those connections growing stronger and stronger between the nations. We need to make sure that we're part of that market growth and that we're also viewed as a valid competitor within the European space.
Australia, also a very important market for us. We are established, continuing to grow our footprint in Australia. I think what we've seen in the next 10 years is close to NOK 30 billion in potential programs for us just in Australia alone. MRO, Eirik had touched on that as well. We're looking at not only taking what we have coming out of KAMS, but looking at other domains as well. Now that you've gotten the expertise, the competence, start to understand the MRO business, how can we apply that in the other domains, the land domain and the naval domain as well? We'll come back to that in future Market Days. Okay, back to naval domain. Vanguard, great image in the movie. I really need a copy of that movie. It was a good one.
This is a concept where, if you look at naval capabilities, frigates, destroyers, aircraft carriers, they're very expensive. Very, very expensive. This concept is not trying to compete at that level. They're not in the upper level classes. We're not trying to be a frigate. We're not trying to be a destroyer. But there's a whole number of requirements at a lower level that require cost-effective solutions for them. That's what Vanguard is geared towards, a standardized vessel concept that you can reconfigure to address whatever the mission need may be in the lower level classes. Technology at this point is also starting to give us the opportunity to have a manned-unmanned teaming capability where you have a mothership, like what is depicted in the chart, that can then control autonomous vehicles that are also supporting the overall mission.
That if you think back to the technologies that have been presented both from Kongsberg Maritime as well as KDI, as well as the technology we have internally within KDI or KDA, this is a very, very feasible operational concept for us and is gaining interest across our customer base. That is one of the areas where we're pushing very strongly across the corporation, trying to leverage technologies and coordination across our business sectors to go into this particular segment. I was wondering how this was gonna work. Space. You've seen and you've tracked, it was also mentioned earlier that we've invested in three small sats. The program is called N3X. I like that there's a number in the program. Wow, that went super fast. In that this doesn't stop.
Oh, maybe it does stop. What we're after is it could be N5X, N7X, N12X, N50X, right? There are. To start with getting small sats up into the constellation, we'll start to build up our mission control capabilities. Wow. Is that a hint? Leverage what we have in our domain expertise from the defense sector and start to build that sovereign capability for Norway. That we have full value chain capabilities for satellite operations, mission control, data processing and delivery. Really wants me to talk about sustainability within NATO or within Norway. That is a very, very exciting initiative for us, and we're really looking forward to being able to tell you more about what that program has resulted in.
Planning on doing our launch with those three satellites within 2024, and continue to talk with other potential customers, given the fact that we will have Maritime surveillance capabilities that are very interesting to not only Norway, but to other nations as well. Look at what's happening in the Arctic, when you start to consider climate, right? Less ice in the Arctic, more shipping lanes potentially opening within the near term. The Arctic region is gonna be a very interesting region in the coming years. This, with the satellite capabilities and the surveillance that we'll have, will be a very valuable asset for many nations, not just Norway. We'll come back to that again in the future. Sustainability, and climate, anything related to that.
You know, typically, most don't think of defense as being the driving segment that's gonna define the future of sustainability. I tell you what, they are a very, very fast follower. What they are looking for is the ability to take advantage of capabilities and investments coming out of the commercial sector that are leading them to the ability to pull in those technologies, right? They probably won't be out there first, but they're gonna be the first ones that are gonna raise their hand and say, "We want that, too." We wanna be one of those leading actors that are introducing those capabilities into our customer base that says, "This is how you can be more sustainable. This is how you can leverage those capabilities that are invested in and matured on the commercial side." It's a great synergy, again, within the company.
Targets, reducing emissions, when you think of us as a company, we also have over 1,500 suppliers within Norway alone. When we start to influence their views of reducing their emissions, that is an exponentially enormous impact within our supply base just in Norway, some of the focus areas that we have. There's a lot of things that we're addressing, a lot of things that we're investing in to ensure not only that we are increasing our pipeline, but we're staying ahead of the curve, and trying to take advantage of the new opportunities that are coming in. With that, I'll let Eirik tell you a little bit more about the other initiatives that we have ongoing at the same time. Back to you.
Thank you, Pam. We talk a lot about growth, and that is important for us. We have been in that for some time. We have initiated and established an internal project to handle the growth so that we secure that we do everything correct. We handle the risk, securing efficient operations and cost control. We try to do everything we can in order to take this growth seriously and in a professional manner. At the same time, with this growth, we are also, so to speak, growing out of Norway. That's where the footprint, Pam talked about, is coming in. Also in Norway is important for us.
Norway is where we establish our products, where we can have a reference customer, because when we sell outside of Norway, the first thing they ask us is the reference customer. That's why Norway is the most important customer when it comes to as a reference. We have established a site establishing different sites, but we have one now in the Rygge and Moss area. Very new area for us, but it's very attractive, so we are able to get competent people working in that area in together with also what we do in Kongsberg and other places. U.S., is important. We're gonna grow there. Australia, we have established ourselves in Australia and also have a supply chain in Australia.
This is the requirement that we. If you want to do business in Australia, and if you want to do business in U.S., for instance, you need to be there. You must be looked as a local company. That's important. Gyrid talked about facilities. We are building up our production capacity both for air defense-based missiles and for us, it's important to secure that we have an efficient operation when it comes to production and so that we are prepared for what we see today, but also for further growth. The last one, recruitment. It's, I would say, all about our people. In the next five years, we're gonna recruit 2,000 more new persons to work for us. Competence is a key for us.
We need high-skilled people, ranging from software to, I would say, specialized production technicians. This is important going forward for us. What we see, you all heard the 100 billion number. We have NOK 35 billion in order backlog. If you look at some of the new initiatives we have stated, it's always difficult to be precise, but we estimate it to be NOK 50 billion within the naval domain, space for defense, other security areas we can enter, also other new initiatives. Where we see it on NOK 50 billion in addition to what we have. To some extent, this is independent of Ukraine war. We had this strategy prior to Ukraine, we need to see how this will also impact affecting our operations.
Let's see how this will develop, but definitely we see an increase in the different defense budget around the world. Just to conclude a little bit quick, this is what we see for the next 10 years, that we are positioned to win programs valued at NOK 100 billion. We believe this is very realistic. We see an increased demand for our products, and if we do the correct steps, as we try to explain a little bit here, I think this is definitely achievable. The demand for defense and security is increasing worldwide. Again, things will not just happen overnight, so that is important to remember. This is a long-term business. We definitely will grow, continue to grow our business in the coming decade. Thank you.
Thank you, Eirik. Before we invite the rest of the presenters to the stage, I have one question from the webcast, going to KDA. It's a question from Antoine Brabant, Moneta. Do you feel that you have a competitive disadvantage for new contracts as you as a Norwegian company are not in the European Union?
Well, I would say both yes and no, but we are working very hard to get the market access. Always part of what we call the European Defence Fund. We actually are part of the programs initiated in Europe as common programs. We also see that so far we have not been locked out of the competition in Europe. It could be a potential threat, but we have not been locked out. We are winning contracts in Europe. We also see that we, going forward, might need to position ourselves or have a setup in European country to become even more EU company, so to speak.
Thank you. I would like to invite all the presenters up to stage. This I couldn't have done half a year ago because we weren't allowed to, but now we can actually stand together. Can I also have one of the handheld microphones up here? Thank you. Okay, we'll start up with a few questions from the webcast. Questions can also be asked from the audience, of course. With regards to margin profile on missiles, could we get some more information about margin profile on missiles versus rest of the activities? What impact should we expect from new CapEx investments? I guess the question goes to both KDA as well as the CFO.
Should I start?
Yes, you can.
First of all, we established this production facility because of the demand for our missile. We need to ramp up. It's a lot of that's important. By doing that, we get a top modern facility for production, so we streamline it. At the same time, I don't believe we will see the same margin level as we have for other products in our portfolio, like air defense. We will expect an increase, and we have put measures to secure that we are doing the correct test to optimize the margins for our missile production. I think it's difficult to state that we will get margins comparable to some of the other high-end or high-margin products we have.
I think it goes like they're trending at 20% margin now, the defense area, and we have a goal of 17%. In that, the missiles is part of that answer because they have a lower margin in total, and we will have, like you saw on the order backlog, also a higher portion of the missile orders coming forward.
Mm.
Having that said, we are also putting a lot of efficiency programs in the missile production, so we're able to take out scale. Because when you have a brand new factory, you should be able to produce on a lower cost than you have with the old system today or the facilities.
Mm.
Thank you. We also have a question on the Maritime side that goes also combined to our CFO. With regards to Sensors and Robotics, can you elaborate a little bit around the growth prospects there and what size it is today and h ow large it potentially could be going forward.
I can start with the figures, then you can say what they are going to do. If you look at the revenue on Sensors and Robotics today, they are NOK 2.7 billion in total. Kongsberg Maritime has NOK 16.5 billion in revenue in total. So around 16%+ of the total. That's the Sensors and Robotics today. Of course, they have a growth goal together for all the Maritime business of 9% CAGR up to 2025. But we don't split up in the different areas. Of course you have 16% of the total. So even if you grow with a very high percentage, it won't be that much in the total. Then you can say what they actually, which areas they are going to grow in.
I think you touched on it in the presentation.
Yeah, of course, the underwater robotics, it's a large area and. But they are generally, they will grow more than the average of Kongsberg Maritime, I can say that. If, for those of you who read the local newspaper of Horten, you might know that we are planning for a new, quite significant building down there. That is also, of course, supported by that we believe in this growth. So,
Today we have the operation on several different locations in Horten, so now we're co-locating them together in the one facility down there. That's something we rent and we don't own. It won't increase the costs for rental for them. We're co-locating in a very cool, actually, new building. I think it will be very beneficial for all the employees and of course also for the production that will be brand new.
Yeah. More efficient.
More efficient.
We started with one building and then we ended in two and then three.
New value capture program.
Yeah. It's very, very positive for the employees down there, and we need to be attractive for employees also.
I think you can also add, Egil, that, you know, you mentioned it during your presentation, that, you know, the robotics part is growing. When that is growing, that means also the sensor part will grow. Because that is the real cool thing, that you really have the sensors and the payloads on these autonomous vehicles.
Yeah.
I also think that we're gonna see growth in the surface unmanned surfaces because that is a small part today, but that is definitely developing going forward.
Underwater mapping, also it start to move on marine minerals. Not that will be large for the first years, but there is a lot of opportunities from around this business. It's a niche, but it's this niche is getting bigger and bigger.
Thank you. Then also for Kongsberg Digital, where I guess the question goes to both Shane and Andreas. Both of you have recently or relatively new solutions that you have gone into the market with both Kognitwin and Vessel Insight. How do you feel the customer dialogue has changed from when you introduced these systems and compared to how it is today in 2022?
Yeah. I think we have two very different markets in some cases from maturity. We see there's this, at least in the energy sector, there's a rapid adoption of this technology. It's, I mentioned the three kind of key drivers that's driving the adoption of these solutions, the energy transition, energy security, and a more digitalized workforce. And it's the spend, the digital spend is high, which is good. They do see that they have to take out these inefficiencies in the organization and they have to meet their targets that we've been setting up for digital, for the energy transition. Again, digital underpins all of those targets and ambitions. Adoption is high. It's, we see standards coming out now as well, which really means that this technology is being accepted, and is gonna be here to stay.
It's very, very good at the moment, I would say, for the energy industry.
Yeah. I think I can second that also from Vessel Insight. We see more and more pull in the market now versus push that we had to do, let's say, early COVID stage. We also see that there are new players coming in and asking for solutions that are crossing between different stakeholders, like from the charter side. We really have a lot of requests and a lot of interest in the market at the moment. For us now it's more the focus on short-term what we can deliver. It's really good market out there.
Thank you. We open up also for questions from the audience here. If you have any final questions, please raise your hand.
Thank you. Inger Lise Meyer from Nordea. Thank you for a great presentation and, informative and very impressive. Two questions. First is on, if you can elaborate a bit on the financial targets for 25 and the growth approximately 10% per year. Is that, does that also include acquired growth or is that, all organic?
Only organic.
Yeah.
Acquired on top. You saw we have options or possibilities to lift a lot. Good ideas. Geir had a wish list.
Excellent. Second on your first quarter presentation, you highlighted a bit of the supply chain issues. Do you see that easing now with China opening up again?
I will pass the answer over to Egil and Eirik on the components. Yeah.
Internally, it is a hassle. We are using more resources than what we used to do. It's not that big issue, really. We have some delays on a few projects, but as I said, we are dealing with it, and we are fixing it, and we expect also the time to help here. It's a bit different theories on what is going to happen for the future, though. It's not a main issue, really.
Just to add, I think, follow what Egil said and I think we spend time on finding new sourcing, et cetera, that is important and also to some extent redesign options. We also can deal with the buffering of components, for instance, so that we have a longer lead on what we are doing. Basically, we see some delays as was presented during first quarter for the weapon stations. It's only delays related to that, and there's no cancellations or anything like that. We will deal with it in a good manner.
Just to add on, they are so extremely difficult to predict because sometimes you get an extra logistic cost because you have some extra freight. Sometimes you didn't get your supply, and sometimes you get delays because you lose one component. It changes from month to month, actually. What was new in the first quarter was that you had both the close down in China and you had the war in Ukraine. It's extremely hard to predict what will happen over the next months, and at least if it lasts for long, the war in Ukraine, what will happen then with the supply in the long run.
Yes. Sindre again from Arctic. Mostly to Eirik about this NOK 150 billion plus pipeline. I think you said it was largely independent of the Ukrainian war.
Mm-hmm. Yeah.
How should we think about that? 'Cause, I mean, if I remember the figures correctly, it's approximately 25% of defense budgets that are related to equipment. When they increase with, let's say, 10%, wouldn't most of that increase go to equipment so that, your relevant market would increase much more than 10%? Is that kind of logical understanding?
Understand what you're saying. That's gonna be interesting to see because this is a wake-up call for especially Europe. They have to now define the budgets in a little bit new setting, I think. One thing is that they don't have stocks of different equipment. That is one thing. At the same time, it's difficult for countries to speed up the process to buy quicker, to be more, how should I put it? Hurry up in the process. That's one aspect of it. But in some aspect, you're right that, when you increase the investment budget, we should then could go into there and look at our portion of that, to see what is addressable from our point of view when it comes to the products we have.
But it's difficult now to see where this will be actually. I don't know if you have anything to fill in there. I think that's the best we can say right now. You know, Germany just approved their EUR 100 billion additional budget, but we don't know how they will handle it. They saw one thing, they ordered F-35s immediately because that was easy to buy. You could see a trend that some countries are buying more of what they have or what is easily available, and they can go direct, like for FMS.
I think, Pam, you mentioned it, that it's probably not gonna be a lot of focus on new development. I mean
Mm-hmm
... it's gonna go for proven technologies, proven equipment, proven, you know, platforms. I think that in that sense, it will point at us as a supplier of niche equipment, and not huge development programs.
Okay. Final follow-up. Gyrid talked about, I think, 14% CAGR for up to 2025, and I guess in defense, 2025 is short-term horizon. Would that estimate that could have been made? That's only rooted in the current backlog, so that could be made before the Ukrainian war, right?
If we could increase the production, then we could probably have even more. At the moment, that's the limit.
Thanks.
Thank you. We have the final two questions from the webcast. You mentioned the lockdown in China and, or in Shanghai and the situation in China. But can you elaborate a little bit around how exposed you are to China and what kind of specific impacts you have seen from the lockdown?
On short term, a lot of logistics is in, coming in or through China. For the short term, I think very much of value creating in the rest of the world is depending on that everything is flowing. Yes, very much. In long term, it's always alternative sources. It's not that we are depending on this if we would like to change or do something else. As you have hundreds of programs going through, there will always be something that is involving China.
There is an impact on some projects, of course.
Yes.
which has been pushed forward, due to the lockdown, naturally. That we see now is opening up again, China, Shanghai.
Yeah.
You said within 14 days, you said?
Yeah, but it is.
It will be gradual.
It hasn't been formal, fully locked down either. We could send people into the office to work, but we couldn't bring them home again, so they have to live there. We consider if that's really worth value or not. It is normal, more or less normal, I would say, or hope. You always have something somewhere in the world.
Thank you. Then the final question from the webcast. Do you have any updates on the process for around KDI with regards to potential future partnerships or IPOs, both with regards to the process and with regards to the resignation of Hege Skryseth?
Now, on the resignation or the replacement of Hege, we are working as fast as we can, and the process is going well. I've been informed. I hope we can bring good news for the successor of Hege pretty soon. We will see. KDI should be an interesting place to take the head, so I'm confident that we will find the right person soon. When it comes to the process of IPO or partnership, I think the situation is like we said in the Q1. We are holding every option open. I think it's important to remember that, you know, our key focus in KDI these days are to scale and to build, you know, on the robust position that we have in the market.
I think Shane and Andreas have explained it quite well today, how the maturity is increasing in these areas. We are focusing on building the business and scaling the business, and then we will see the opportunities, whether that will be IPO or partnership.
Since it's the last question, we can also say that, KDI are IPO ready.
Yeah.
It's all about the market now and finding a new CEO also. There are a lot of people in the room here now that have been working a lot with the IPO KDI, and they are IPO ready when the time is right.
We have one more question here.
It comes another question.
I was just wondering on the comment you made on the Swedish and the Finnish equipment suppliers joining sort of the NATO potentially, and that's changing the competitive landscape for your defense business. How has that been until now? What do you think is going to be the change in the future? I mean, are you being a preferred supplier if you are from a country that is a NATO member? What has been the situation until now, and what do you expect to happen?
Start.
Within NATO, many of the programs you're required to be a NATO nation because of interoperability and the way data is exchanged, things like that. There's definitely a group of nations and industries that are preferred in programs that are funded by NATO. The industries, like I'd mentioned, both Swedish industry and Finnish industry are very capable industries. We've met them in competitions outside of NATO-specific programs. We know how competitive they are. I think it will up our game as far as having them in our competitive space across the board, but there isn't maybe a set of isolated programs that are a little more, maybe not protected, but definitely have requirements related to NATO interoperability, NATO standards, which typically Swedish and Finnish industry don't necessarily comply. It will absolutely add more competitors into our market space.
Just to add, we are facing competition from Swedish companies.
All the time.
All the time. This is not a new thing for us. I wouldn't put this as a just exchange. I think it's positive for our operation with Patria as well. In general, we are facing the same competition as we have always done. There might be some NATO programs that some, for instance, might enter and competing directly, but there's not too many NATO programs on its own.
What's also interesting is it could be there's a requirement that nations buy more NATO-compliant equipment. That could actually open opportunities for us in both of those nations where they are required to buy NATO interoperable systems and capabilities.
If you look at the number behind you, I mean, you look at NOK 150 billion of potential tender or pipeline work over 10 years. That's NOK 15 billion a year on average. That's what you had the last two years in the KDA, right?
Yep.
You talk about growing your revenue by NOK 10 billion over the next 3 years.
Mm-hmm.
Is that number too conservative or where is that incremental growth gonna come from?
Well, these are established from the new initiatives we see. You're right in your assessment on numbers as we see. We have achieved a lot within three years. I wouldn't say conservative, but it's a realistic number. Obviously we are looking for more as well.
Okay. Thank you.
Okay. I would just like to say thank you for being patient, and I hope that you have got some more insights in our business areas and our, let's say, plans for the next period. At least I have noticed that we are quite positive, here we stand. We have a fantastic position in all our business areas. We are more solid than we have been ever before, I think. The platform from where we're gonna jump, I think is very solid. We are prepared to continue the growth in Kongsberg and also deliver both top line and, you know, the earnings that will continue to grow. Thank you so much for joining us, and thank you to those of you on the webcast.
I look forward to see you next time. Thank you so much.